No. 326: Lyrical Lemonade Empire

To understand the future, listen to the kids. In this case, I am recalling a short conversation between my oldest daughter Alexis and I in the spring of 2018. Dad, have you watched the Lucid Dreams video? Oh my gosh. In May of 2018, I was sitting in a conference room with a packed whiteboard of ideas and the math to justify them. In that room, I was laying out another idea to partner with an indie music festival ownership group. Independent music operations yield tremendous power to influence the cultural zeitgeist. Monetizing it is as simple as meeting supply with demand. But rarely do you find the operation with true, organic demand. For this exercise, the math held up. However, I ended up scrapping the idea of brokering a deal between the two groups.

As is most in edgy music scenes like hip hop or EDM, pairing the right product with a primed audience would require a risk tolerance and the willingness to go all-in on the partnership. And just a few weeks prior, the first attempt had fallen short of expectations. I’d spent several days assessing what could have been done differently. I came to the conclusion that it wasn’t worth the trouble.

Hip hop culture is not for the meek, the safe, or the politically timid. But for a merchandising company, it could be lightning in the bottle if executed appropriately. In the Midwest, there are fewer greater examples of lightning in a bottle than Ohio’s Prime Social Group (PSG), the ownership group behind The Number Fest and other top festivals. For a time, there was no festival that was more skilled at identifying talent that was primed to go mainstream. By the time the festival’s weekend came about – each year – the once-obscure talent would be a household name. The business model was brilliant. And it’s one that an even younger entrepreneur would perfect.

Dominic Petrozzi is the founder of The Number Fest and, now, a partner at Prime Social Group. I’ve been such a fan of what his partners have built and I recognized the linear commerce opportunity. This led me to introduce them to The Chernin Group‘s investment group. Their portfolio includes: Barstool Sports, The Athletic, and The Action Network. Though they focus on traditional “indie” media, it was clear that the same type of model could work well in the festival business. In an email between the two companies’ principals, I concluded with:

I have watched [Prime Social Group] grow into something special in the entertainment space, here in Columbus and abroad. I know that PSG is (currently) outside of The Chernin Group’s investment thesis but I believe this to be a worthwhile conversation between the two of you.

When I mentioned the research for this brief, Petrozzi provided industry insight on a young, hungry media company that was primed for the mainstream. It was the same media group that I scribbled on a Pittsburgh whiteboard in May of 2018. Just a few days prior to that whiteboard session, my oldest daughter suggested that there was something special happening in Chicago music. An avid consumer of Youtube, she knew all about Lyrical Lemonade and its college-aged founder. She loved the music but she really admired the company’s unique approach to visual production.

The fledgling media company was more impressive than I originally believed. Here’s PSG’s Petrozzi on Lyrical Lemonade’s growth:

Turning down $30 million for essentially an urban / hip hop-centric media company is insanely awesome to me. I think that’s the future in and around the live event space. The revenue generated by content will eventually outweigh all other revenue streams in festivals.

He finished his thoughts with a provocative comparison:

I’m all for the prosperity of the industry. Chicago is a market we’ll never see. I think what [Cole Bennett] is doing is similar to Barstool Sports’ strategy. But cool, indie, hypebeast-based fans instead of pseudo-bro, Portnoy sheep.

What Petrozzi was describing was linear commerce as applied to his industry. And, as far as independent promotions are concerned, there may be no greater example than Cole Bennett’s booming operation.

Linear Commerce and Lyrical Lemonade

A recent profile in Complex Magazine tells the story of a coming-of-age videographer and media entrepreneur: a suburban kid thriving in an urban environment. The 23 year old videographer and founder of Lyrical Lemonade shares a surname with one of the two most visible hip hop artists in his state – Chance Bennett – known to the masses as “Chance The Rapper. But that’s where the comparison ends.

In its early stages, Bennett’s YouTube channel was dedicated to Chicago show recaps, local cyphers, and documentaries about the city’s hip-hop scene. Then, in 2016 and 2017, he began working with artists like Famous Dex, Lil Pump, and Ski Mask the Slump God, and soon became the go-to video director for an entire subgenre that was exploding from SoundCloud pages into the mainstream.

For Cole Bennett and the six year old Lyrical Lemonade, the DePaul University dropout is writing the playbook that the more-established leaders in the space wish that they could duplicate. From a 2017 article by the Chicago Reader:

Videographer and manager Cole Bennett launched Lyrical Lemonade as a senior at Plano High School, an hour southwest of Chicago. For more than a year now, his splashy, colorful aesthetic has been attracting rappers from farther and farther afield—at this point, about half the people who pay him to make music videos are from somewhere besides Chicago.

The musical talent is Chicago-based but the center of the state’s burgeoning hip hop scene may be a town of less than 10,800. That’s the home of Bennett and his family. The indie music blog launched in 2013 from the small town of Plano, Illinois – an hour and twenty minutes southwest of Chicago. Here is a quick rundown of the media company’s digital assets, today:

Lyrical Lemonade is a linear commerce engine, a platform that could achieve an organic 7-8 figures in annual sales with organic traffic – alone. Petrozzi’s comparison to Barstool was prescient; a quick scrape of Barstool’s eCommerce data shows a 2019 headed for north of $10 million in annual sales – a small but significant enough portion of a business that is heavily-dependent on podcast revenue. It appears that Bennett and his management partners are similarly positioned to take full advantage of its tremendous flywheel of content, promotion, and sincere fandom.

The digital economy rewards the companies that work along the line that partitions digital media and traditional eCommerce. A great product needs an organic and impassioned audience. Captive audiences will need products and services tailored to their tastes. Linear commerce is the understanding that digital media and online retail will eventually meet at the center – along the line – the most efficient path for growth.

Source: Twitter

In the last 60 days, Lyrical Lemonade has migrated from Big Cartel to Shopify, a shift that signals added sophistication to their growing operation. Former employee of independent merchandising agency Haight Brand, Elliot Montanez also maintains the pace of the Bennett’s editorial calendar. According to LinkedIn, Montanez left Haight Brand in 2018 to focus on Lyrical Lemonade’s latest plans.

This includes this week’s CPG launch, the company’s four-pack of canned lemonade. This is the first product that Lyrical Lemonade will offer, in addition to the traditional apparel-based products. The product is an obvious nod to the company’s brand. But the drink also serves as a tongue-in-cheek reference to the illicit party habits that are common within the gritty hip hop circles associated with Bennett and his team.

What separates Lyrical Lemonade from other promotions and media companies is its access. By cultivating talent at its earliest stages and promoting them in the ways that are often-limited to mainstream acts, Lemonade has developed a 360 degree promotional pipeline. In this way, the company’s reach extends beyond its digital numbers. The musical acts that are now mainstream owe at least some of their success to Bennett, this translates to continued digital and commerce-related growth.

In talking to Dominic Petrozzi, a veteran in Bennett’s industry, the executive spoke highly of the entrepreneur’s prospects. He clearly understand what it takes. The Summer Smash Festival is a marquee event for Lyrical Lemonade; it’s likely the first of many real world opportunities for Bennett and team to authentically reach customers. Petrozzi recognized some of the overlap between his business and Bennett’s but was gracious in his assessment:

Cole is smashing. Summer Smash will be a staple in the festival world in the next two years.

Lyrical Lemonade has sold more than 15,500 units since their recent site re-launch. With an aggregate audience nearly 20 million strong and a retail business capable of high seven figures in 2019 and 2020, there’s a clear trajectory. Bennett – who calls himself a “standard student”, may prove brilliant to turn down the reported $30 million acquisition offer. There will surely be more of them. From TikTok’s upcoming phone to three million dollar purses for Fortnite tournament victories, Generation Z’s influence on the market is creating unique outcomes. To understand the future, listen to the kids.